Key takeaways:
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ETH remains capped below $3,000 as repeated breakout failures weaken trader confidence and suppress short-term momentum.
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A sustainable ETH rally will require stronger network activity and DApp demand to offset weak leverage and ETF flows.
Ether () has traded within a narrow 4% range for the past week, leading traders to question whether the $2,900 support level will hold. Repeated failures to break above $3,000 have coincided with a decline in Ethereum network fees and muted demand for Ether exchange-traded funds (ETFs).
This lack of conviction is also evident in ETH derivatives markets, prompting traders to reassess whether a sustainable recovery is still possible in the near term.
ETH monthly futures traded at a 3% annualized premium relative to spot markets on Tuesday, signalling extremely low demand for bullish leveraged positions.
Under neutral conditions, this premium typically exceeds 5% to compensate for the longer settlement period, but it has remained below that threshold for the past couple of weeks.
Part of the weak investor sentiment can be explained by falling Ethereum network fees, as traders anticipate lower demand for ETH.
More importantly, demand for competing blockchains focused on decentralized applications (DApps) has remained steady, leading investors to question why the Ethereum network has lagged.
Ethereum network fees declined by 26% from their baseline, even as the increased by 10% over the period. At first glance, Ethereum activity has not faded. But a significant part of ETH’s price outlook depends on actual demand for blockchain processing.
By comparison, transactions on BNB Chain and Solana were largely flat over the same seven-day window. To determine whether demand for Ether remains solid, it is necessary to assess the effective usage of DApps on the network.
Fees generated by Ethereum DApps have remained relatively flat over the past four weeks, although well below the $140 million peak recorded in October. The data shows that activity on the Ethereum network is stagnant, but far from collapsing.
The lack of optimism around ETH’s short-term momentum is also evident in selling pressure on Ether ETFs. This metric is commonly linked to institutional demand, particularly as these instruments saw nearly $17 billion in inflows.
BlackRock’s iShares Ethereum Trust ETF (ETHA US) leads the group, with $10.2 billion in assets under management.
The $307 million in daily net since Dec. 17 may not be materially significant, as it represents less than 3% of total assets, but the lack of demand still weighs on investor sentiment. Even professional traders can turn skeptical after two weeks of repeated failures by ETH to hold above the $3,000 level.
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Additionally, it is difficult to separate Ether’s weak performance from broader risk concerns tied to a global economic slowdown.
As governments face , central banks have less room to cut interest rates, increasing recession risks. As a result, investors are likely to remain cautious toward the cryptocurrency market until there is greater clarity on the economic outlook.
While weak demand for bullish ETH leveraged positions and Ether ETFs is not a death sentence, a sustainable rally likely depends on stronger Ethereum network activity and rising demand for DApps.
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